SINA Corp. Delivers a Beat and Raise

By Markets Fool.com


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IMAGE SOURCE: SINA CORPORATION.

SINA Corporation(NASDAQ: SINA) announced strong second-quarter 2016 results Monday after the market closed. The Chinese online media company benefited as usual from its large stake in fast-growing microblogging websiteWeibo(NASDAQ: WB), but also touted the continued execution of its mobile-centric strategy for monetizing its core portal business.With shares up 15% Tuesday as of this writing, let's see what drove SINA's quarterly beat:

SINA's results: The raw numbers

Metric

Q2 2016 Actuals

Q2 2015 Actuals

Growth (YOY)

GAAP net revenue

$244.0 million

$213.6 million

14.2%

GAAP net income attributable to SINA

$43.3 million

$11.7 million

270.1%

GAAP net income per diluted share

$0.59

$0.19

210.5%

DATA SOURCE: SINA CORPORATION.

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What happened with SINA this quarter?

  • On an adjusted (non-GAAP) basis, revenue climbed 14.4% year over year, to $241.4 million. SINA's adjusted net income was $19.9 million, or $0.27 per share, up from adjusted net income of $4 million, or $0.06 per share, in last year's second quarter.
  • For perspective, and while we don't pay much attention to Wall Street's near-term demands, analysts' consensus estimates called for lower adjusted quarterly revenue of $228.9 million and adjusted net income of $0.15 per share.
  • Online advertising revenue increased 16% year over year, to $205 million, as a $38.4 million increase in Weibo advertising and marketing revenue offset a $9.7 million decline from portal ad revenue.
  • Weibo's daily active users grew 36% year over year, to 126 million.
  • Weibo's monthly active users in June 2016 grew 33% year over year, to 282 million, of which 89% were mobile users.
  • Mobile devices generated 48% of total portal advertising revenue during the quarter, up from 44% last quarter.
  • Adjusted non-advertising revenue rose 4.6% year over year, to $38.9 million.
  • Gross margin expanded 40 basis points year over year, to 64%, with the increase driven in advertising by growing revenue contributions from small and medium enterprise customers in both portal and Weibo, and increases in higher-margin businesses within non-advertising such as Weibo membership revenue.
  • Cash from operations during the quarter was $76.6 million, and capital expenditures were $4.9 million.
  • The quarter ended with $2.1 billion in cash, equivalents, and short-term investments, and $797.9 million in convertible debt.

What management had to say

SINA CEO Charles Chao called the quarter "solid," further stating the company is "delighted" with SINA's progress in mobile monetization within the portal business. Commenting on Weibo, Chao elaborated:

[W]eibo continued its strong user growth momentum, thanks to the effective channels we have built for user penetration and the optimized user experience we cultivated in short video and live contents consumption. On the other hand,Weibohas demonstrated strong platform value proposition to a diversified customer base with significant growth in advertising revenues from key accounts and small and medium enterprises. We are also delighted to see continuing operating margin expansion forWeibo, strongly demonstrating operating leverage of the platform.

Looking forward

Given its strong results year to date, SINA now expects adjusted 2016 revenue between $950 million and $1 billion, good for growth of 9% to 15% over fiscal 2015, and an increase from its previous guidance for adjusted full-year revenue of $850 million to $950 million.

Apart from its relative outperformance as it heads into the second half of the year, more than anything, this quarter represents a continuation of the same encouraging progress we've seen from SINA over the past few quarters. As SINA continues to deliver on its mobile strategy with its portal business, while also enjoying the fruits of its stake in fast-growing Weibo, it's no surprise to see shares trading at a fresh 52-week high right now.

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Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Sina. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.